A spouse cannot convert or diminish marital assets so as to diminish the other spouse’s distributable share. Vander Weert v. Vander Weert, 304 N.J. Super. 339, 349 (App. Div. 1997).

“Public policy concerns require divorcing spouses to deal fairly with each other.” Tannen v. Tannen, 416 N.J. Super. 248, 262 (App. Div. 2010), aff’d, 208 N.J. 409 (2011).

NOTE: My Law Office is located at 726 West Saint Georges [W. St. Georges] Avenue (Route 27), Linden, Union County, NJ. Telephone: 908-486-2200; EM@IL

Public policy concerns require divorcing spouses to deal fairly with each other originally appeared on NJ Family Issues on February 2, 2012.

In awarding counsel fees, courts consider the bad faith of a party. N.J.S.A. 2A:34-23. Bad faith can be established by the “intentional misrepresentation of facts or law” to avoid or unfairly limit equitable distribution or alimony. Borzillo v. Borzillo, 259 N.J. Super. 286, 293-94 (Ch. Div. 1992). See Brown v. Brown, 348 N.J. Super. 466, 474 (App. Div.) (defendant acted in bad faith in misrepresenting his income and assets subject to equitable distribution), certif. denied, 174 N.J. 193 (2002).

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Bad faith can be established by the intentional misrepresentation of facts or law to avoid or unfairly limit equitable distribution or alimony originally appeared on NJ Family Issues on January 8, 2012.

In distributing marital property, it is “not . . . improper for a judge to give appropriate heed to legitimate tax considerations . . . where the most equitable disposition of property interests can thereby be best attained.” Painter v. Painter, 65 N.J. 196, 212-13 (1974). Although a “hypothetical tax is simply too speculative to permit a reduction in value,” Orgler v. Orgler, 237 N.J. Super. 342, 355 (App. Div. 1989), where “the ex-spouse is able to demonstrate the present tax consequence . . . [a] distribution of the net value . . . best attains an equitable distribution of the asset.” Id. at 356.

NOTE: My legal and mediation services are offered to clients in Fanwood 07023; Garwood 07027; Kenilworth 07033; Mountainside 07092; New Providence 07974; Roselle Park 07204; Roselle 07203; Elizabeth 07201; Linden 07036; Plainfield 07060; Rahway 07065; Summit 07901; Westfield 07090; Berkeley Heights 07922; Clark 07066; Cranford 07016; Hillside 07205; Scotch Plains 07076; Springfield 07081; Union 07083; Winfield; Carteret 07008; Dunellen 08812; East Brunswick 08816; Edison 08817; Jamesburg 08831; Metuchen 08840; New Brunswick 08901; Old Bridge 08857; Perth Amboy 08861; Sayreville 08871; South Amboy 08878; South River 08877; Avenel 07001; Colonia 07067; Iselin 08830; Woodbridge 07095; Somerset 08873; Somerville 08876 and Watchung 07069, New Jersey.

In distributing marital property, it is not improper for a judge to give appropriate heed to legitimate tax considerations where the most equitable disposition of property interests can thereby be best attained originally appeared on NJ Family Issues on November 15, 2011.

“[A]ll property, regardless of its source, in which a spouse acquires an interest during the marriage shall be eligible for distribution in the event of divorce.” Painter v. Painter, 65 N.J. 196, 217 (1974). However, “for purposes of determining what property will be eligible for distribution the period of acquisition should be deemed to terminate the day the complaint is filed.” Id. at 218 (construing N.J.S.A. 2A:34-23). A marital debt is “directly traceable to the acquisition of marital property” while a non-marital debt is not. Clark v. Clark, 324 N.J. Super. 587, 596 (Ch. Div. 1999); see also Monte v. Monte, 212 N.J. Super. 557, 567 (App. Div. 1986) (stating same). Further, “[w]here a debt is challenged as non-marital, the owing party bears the burden to show that the debt is traceable to a marital asset.” Clark, supra, 324 N.J. Super. at 597.

Any income individually received by the parties subsequent to the filing of the divorce complaint is non-marital property. See Painter, supra, 65 N.J. at 217; Clark, supra, 324 N.J. Super. at 596. The portion of income tax liability for income earned prior to this date would be traceable to a marital asset while the tax liability corresponding to income earned subsequently would not be. See Monte, supra, 212 N.J. Super. at 567.

Where the parties had not reached an agreement as to joint returns and the division of tax liabilities arising from income earned prior to the filing of the divorce complaint, the judge is required to consider all of the circumstances of the parties, including the propriety of filing joint returns and the under- or over-withholding of income taxes, and then to equitably distribute the tax consequences after applying all of the factors governing equitable distribution. See N.J.S.A. 2A:34-23.1; Bursztyn v. Bursztyn, 379 N.J. Super. 385, 398 (App. Div. 2005) (cautioning that courts “should avoid compelling parties to execute joint tax returns because of the potential liability to which the parties would be exposed”).

NOTE: My Law Office is located at 726 West Saint Georges [W. St. Georges] Avenue (Route 27), Linden, Union County, NJ. Telephone: 908-486-2200; EM@IL

Any income individually received by the parties subsequent to the filing of the divorce complaint is non-marital property originally appeared on NJ Family Issues on November 2, 2011.

Our Supreme Court has set forth a three-step process for trial courts to follow in equitably distributing marital assets. The court “must first decide what specific property of each spouse is eligible for distribution. Secondly, [the court] must determine its value for purposes of such distribution. Thirdly, [it] must decide how such allocation can most equitably be made.” Rothman v. Rothman, 65 N.J. 219, 232 (1974). The process of equitable distribution is “not simply a mechanical division of marital assets. The concept requires much more than that. The word ‘equitable’ itself implies the weighing of the many considerations and circumstances that are presented in each case.” Stout v. Stout, 155 N.J. Super. 196, 205 (App. Div. 1977) (internal citations omitted). By statute, the trial court must consider the following factors:

a. The duration of the marriage . . .;
b. The age and physical and emotional health of the parties;
c. The income or property brought to the marriage . . . by each party;
d. The standard of living established during the marriage . . .;
e. Any written agreement made by the parties before or during the marriage . . . concerning an arrangement of property distribution;
f. The economic circumstances of each party at the time the division of property becomes effective;
g. The income and earning capacity of each party . . . ;
h. The contribution by each party to the education, training or earning power of the other;
i. The contribution of each party to the acquisition, dissipation, preservation, depreciation or appreciation in the amount or value of the marital property . . . as well as the contribution of a party as a homemaker;
j. The tax consequences of the proposed distribution to each party;
k. The present value of the property;
l. The need of a parent who has physical custody of a child to own or occupy the marital residence . . . and to use or own the household effects;
m. The debts and liabilities of the parties;
n. The need for creation, now or in the future, of a trust fund to secure reasonably foreseeable medical or educational costs for a spouse . . . or children;
o. The extent to which a party deferred achieving career goals; and
p. Any other factors which the court may deem relevant.

[N.J.S.A. 2A:34-23.1.]

“The distribution rights of the former spouses to the marital residence need not be equal if allocation of sole ownership or allocation of a major share to one of them is warranted by all the financial and personal considerations underlying the equitable distribution plan.” Daeschler v. Daeschler, 214 N.J. Super. 545, 553 (App. Div. 1986).

The court should not start with a presumption of a fifty-fifty split of all marital assets. Such an approach was expressly disapproved by the Supreme Court in Rothman, supra, 65 N.J. at 232 n.6.

Equitable distribution is not intended to be a precise division of marital property according to mathematical calculations or formulas.

NOTE: This Blog/Blawg, NJ Family Issues, is managed by Paul G. Kostro, Esq., an attorney/lawyer/mediator in Linden, Union County, New Jersey.

Equitable distribution is not intended to be a precise division of marital property according to mathematical calculations or formulas originally appeared on NJ Family Issues on October 31, 2011.

“[I]t is settled law in New Jersey that, unlike an award of alimony or support, property division or equitable distribution provisions may not be adjusted after divorce to reflect unanticipated changes in the parties’ circumstances, because the finality of a property division precludes any modification based on such changed circumstances.” Schwartzman v. Schwartzman, 248 N.J. Super. 73, 77 (App. Div.), certif. denied, 126 N.J. 341 (1991). Further, “[s]ubsequent events which should have been in contemplation of the parties as possible contingencies when they entered into the contract will not excuse performance” of a obligations under a PSA. Schiff v. Schiff, 116 N.J. Super. 546, 561 (App. Div. 1971), certif. denied, 60 N.J. 139 (1972).

An application for modification of a PSA is appropriately considered under Rule 4:50-1(f). Schwartzman, supra, 248 N.J. Super. at 77. Rule 4:50-1 provides:

On motion, with briefs, and upon such terms as are just, the court may relieve a party or the party’s legal representative from a final judgment or order for the following reasons:
(a) mistake, inadvertence, surprise, or excusable neglect;
(b) newly discovered evidence which would probably alter the judgment or order and which by due diligence could not have been discovered in time to move for a new trial under [Rule] 4:49;
(c) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party;
(d) the judgment or order is void;
(e) the judgment or order has been satisfied, released or discharged, or a prior judgment or order upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment or order should have prospective application; or
(f) any other reason justifying relief from the operation of the judgment or order. It is within the trial court’s broad discretion to award relief under Rule 4:50-1(f), provided the requesting party has shown that “‘exceptional and compelling circumstances’” exist such that enforcement of the PSA would be unjust, oppressive or inequitable.

Schwartzman, supra, 248 N.J. Super. at 77 (quoting Baumann v. Marinaro, 95 N.J. 380, 393 (1984)).

The burden on the moving party to show exceptional circumstances is not equal to the lesser standard of changed circumstances, which applies to requests to modify alimony and support agreements. Id. at 78; Larbig, supra, 384 N.J. Super. at 24.

“[R]elief is granted sparingly” under this rule, Eaton v. Grau, 368 N.J. Super. 215, 222 (App. Div. 2004), and a trial judge’s decision as to whether a PSA should be modified under Rule 4:50-1(f) should not be overturned absent a clear abuse of discretion. Schwartzman, supra, 248 N.J. Super. at 77 (citing In re Adoption of Child of Indian Heritage, 111 N.J. 155, 184 (1988)).

NOTE: My legal and mediation services are offered to clients in Fanwood 07023; Garwood 07027; Kenilworth 07033; Mountainside 07092; New Providence 07974; Roselle Park 07204; Roselle 07203; Elizabeth 07201; Linden 07036; Plainfield 07060; Rahway 07065; Summit 07901; Westfield 07090; Berkeley Heights 07922; Clark 07066; Cranford 07016; Hillside 07205; Scotch Plains 07076; Springfield 07081; Union 07083; Winfield; Carteret 07008; Dunellen 08812; East Brunswick 08816; Edison 08817; Jamesburg 08831; Metuchen 08840; New Brunswick 08901; Old Bridge 08857; Perth Amboy 08861; Sayreville 08871; South Amboy 08878; South River 08877; Avenel 07001; Colonia 07067; Iselin 08830; Woodbridge 07095; Somerset 08873; Somerville 08876 and Watchung 07069, New Jersey.

Unlike an award of alimony or support, property division or equitable distribution provisions may not be adjusted after divorce to reflect unanticipated changes in the parties’ circumstances originally appeared on NJ Family Issues on October 31, 2011.

Equitable distribution is governed by N.J.S.A. 2A:34-23h. It “`is responsive to the concept that marriage is a shared enterprise, a joint undertaking, that in many ways is akin to a partnership.’” Steneken v. Steneken, 183 N.J. 290, 299 (2005) (quoting Rothman v. Rothman, 65 N.J. 219, 229 (1974)). N.J.S.A. 2A:34-23.1 enumerates sixteen factors that a court must consider in making an equitable distribution of marital property.

The process of equitably distributing marital property is not a mechanical exercise; it must identify and weigh the various relevant factors. Wadlow v. Wadlow, 200 N.J. Super. 372, 377-78 (App. Div. 1985).

The appellate court reviews an equitable distribution award crafted by a trial judge pursuant to an abuse of discretion standard. Lasala v. Lasala, 335 N.J. Super. 1, 6 (App. Div. 2000), certif. denied, 167 N.J. 630 (2001).

NOTE: My legal services include family law, divorce, child support, litigation, arbitration, mediation, child custody and visitation, alimony, equitable distribution, separation agreements, palimony, PSA, property settlement agreement, premarital and prenuptial agreements, midmarriage and marital agreements.

Equitable distribution originally appeared on NJ Family Issues on October 8, 2011.

Parties are free to negotiate the issues of support and equitable distribution and the court is obligated to enforce a marital agreement when a party’s acceptance was voluntary, consensual, fully informed, knowingly assumed, fair and equitable. Faherty v. Faherty, 97 N.J. 99, 107-08 (1984); Petersen v. Petersen, supra, 85 N.J. at 642.

NOTE: My legal services include family law, divorce, child support, litigation, arbitration, mediation, child custody and visitation, alimony, equitable distribution, separation agreements, palimony, PSA, property settlement agreement, premarital and prenuptial agreements, midmarriage and marital agreements.

Parties are free to negotiate the issues of support and equitable distribution and the court is obligated to enforce a marital agreement when a party’s acceptance was voluntary, consensual, fully informed, knowingly assumed, fair and equitable originally appeared on NJ Family Issues on September 28, 2011.

Book value is defined as:

Accounting terminology which gives a going-concern-value for a company. It is arrived at by adding all assets and deducting all liabilities and dividing that sum by the number of shares of common stock outstanding. . . . The valuation at which assets are carried on the books, that is, cost less reserve for depreciation.

[Black's Law Dictionary 165 (5th ed. 1979).]

See also Shannon P. Pratt, Robert F. Reilly & Robert P. Schweihs, Valuing a Business, 913 (4th ed. 2000).

Fair market value is defined as “[t]he amount at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of the relevant facts . . . in the open market . . . .” Black’s Law Dictionary 537 (5th ed. 1979).

While book value reflects the cost of the asset as reflected on the entity’s books, fair market value reflects the asset’s value in the open market. It is not unusual for the two values to vary and in many instances differ substantially.

There is no single definition of book value that can be applied in all cases. Lambert v. Fishermen’s Dock Coop., Inc., 61 N.J. 596, 604 (1972). However, the terms “net worth” and “book value” have been found to be synonymous. See N.J.S.A. 54:10A-4(d) (providing that net worth means the aggregate of the values disclosed by the books of the corporation).

Nothing in New Jersey law suggests that the term book value, without further definition or explanation, is inherently ambiguous. Nor is there any requirement that the term be defined in an agreement in order to avoid a claim of ambiguity.

NOTE: My Law Office is located at 726 West Saint Georges [W. St. Georges] Avenue (Route 27), Linden, Union County, NJ. Telephone: 908-486-2200; EM@IL

Book Value and Fair Market Value originally appeared on NJ Family Issues on September 17, 2011.

A personal injury settlement for pain and suffering is exempt from equitable distribution, Landwehr v. Landwehr, 111 N.J. 491, 493 (1988).

NOTE: My Law Office is located at 726 West Saint Georges [W. St. Georges] Avenue (Route 27), Linden, Union County, NJ. Telephone: 908-486-2200; EM@IL

A personal injury settlement for pain and suffering is exempt from equitable distribution originally appeared on NJ Family Issues on June 25, 2011.